Broadband Cable Association of Pennsylvania

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October 18, 2013

When Philadelphia lawyer Ned Diver needs a break, he wanders down the hall to a workout room with stationary bikes, free weights, and a wall-mounted mat that he peppers with hockey pucks. And while Diver takes slap shots at the blue makeshift target, sweat beading on his brow, the 44-year-old lawyer can look out the window of the 41st floor in the Bell Atlantic tower and see the offices of one of his chief legal adversaries: Comcast Corp.

A partner with the boutique firm Langer Grogan & Diver P.C., Diver is the lead attorney in a consumer proposed-class-action lawsuit against Major League Baseball, the NHL, and regional sports networks, including those owned by Comcast and DirecTV. The suit claims the leagues, teams, and pay-TV companies have engaged in an illegal cartel to geographically divide the country into territories for broadcasting the games on TV and streaming them over the Internet.

The practice has carved the sports market into regional monopolies for the benefit of the leagues, teams, and regional sports networks, the suit says. "It's a classic division of the market," said Diver, a Boston native and sports fan who tracks some of his interest in the topic to the fact that Red Sox games were blacked out of his DirecTV service when he first came to Philadelphia. "It would be like Genuardi's agreeing to take the Philadelphia grocery market and Acme taking the suburbs and the two supermarket chains not having to compete on price," Diver said.

Sports teams should be allowed to sell their games to sports fans in any TV market. This would bring down the price of sports content on the Internet and cable for tens of millions of consumers, Diver said. A goal of Diver's suit would be to allow a sports fan to strike a relationship with a favorite team or teams without having to buy a cable package or a league package of unwanted games. Another goal would be to dismantle the restrictions on how teams distribute their games on pay-TV systems.

The leagues and other defendants have lined up powerful firms to defend their practices and called the suit's claims meritless. "Plaintiffs' complaint is simply that they would 'prefer' different packaging of the very same games already available to them," the defendants wrote the court. The demands, they said, "are legally baseless, have been rejected by prior courts, and should be dismissed in their entirety." But the case, filed in early 2012, has cleared its first major hurdle: a motion to dismiss by the defendants. Judge Shira A. Scheindlin of the federal court in the Southern District of New York denied the motion in December while limiting the lawsuit's scope. The case now faces the legal obstacle course of summary judgment, class certification, and a trial.

David Goodfriend, a Washington lawyer and chairman of the Sports Fans Coalition, a nonprofit advocacy organization, said, "The fact that the case got this far is significant." By this point, he said, cases are typically settled, dismissed, or languishing. Diver's suit uses in its complaint statements by pro teams themselves. A 1998 lawsuit by the New York Yankees said Major League Baseball was "a cartel that has exceeded the boundaries of necessary competition." The suit, New York Yankees Partnership and Adidas America Inc. v. Major League Baseball Enterprises Inc., was settled before a trial.

Madison Square Garden L.P., the owner of the Rangers hockey team, claimed in a lawsuit that the NHL was a cartel and that the league's televising and streaming restrictions were anticompetitive and unlawful, Diver's suit says. This also was settled. Terms were not made public. Diver and his team of plaintiffs lawyers are gathering facts and intend to depose Bud Selig, the commissioner of Major League Baseball, and Gary Bettman, commissioner of the NHL, over the next several months. "Everyone concedes," Diver said, "that cable-television costs are shooting through the roof and everyone concedes that sports costs are the primary problem." Philadelphia Inquirer

Hulu named 21st Century Fox executive Mike Hopkins as its chief executive, effective immediately, the streaming video company said on Thursday. Hopkins served as president of distribution at Fox and is a Hulu board director. Andy Forssell, the acting CEO since March, is leaving the company. "With Mike's appointment, and its owners fully aligned and committed to seizing the incredible opportunities that lie ahead, we look forward to a very bright future for Hulu," Peter Rice, chairman and CEO of the Fox Networks Group, said in a statement. Hulu offers streaming TV shows and movies and makes its money from advertising and subscriptions. It is owned by the Walt Disney Co , 21st Century Fox and Comcast. The owners considered selling Hulu earlier this year but called off the process and instead invested $750 million to help grow the service. Reuters

Like a tortoise, Verizon Communications is slowly but steadily catching on its hare-like pay-TV rivals. Verizon's third-quarter results Thursday morning showed the company's FiOS business gained a net 135,000 video subscribers, an improvement over the year-earlier quarter's net additions. That was the second quarter in a row it has boosted its net additions from the year earlier period, a reversal of a longer term decline in its growth rate often cited by rivals and critics of Verizon's costly FiOS investment.

How long Verizon can keep increasing its rate of growth isn't clear. The company acknowledged on its earnings call that it benefited from "the dispute that happened" in the third quarter, an apparent reference to Time Warner Cable Inc.'s battle with CBS, which blacked out the number one television network on Time Warner Cable's lineup in major markets such as New York for most of August. TWC has acknowledged losing some subscribers as a result of that spat. But even if its rate of growth starts slowing again, Verizon is still adding video subscribers, at a time when its rivals in cable are shedding them. In other words, Verizon is still gaining share. In the most recent quarter, FiOS hit 5.2 million subscribers: It ranks fifth in terms of pay TV distributors, behind Comcast, DirecTV, Dish and Time Warner Cable. And it has 35% penetration of its market, which is nothing to scoff at, it said today. Verizon may be best known nowadays as a wireless player. But it has become a force in television as well. Wall Street Journal

State Sen. Michael J. Stack 3d, the Philadelphia Democrat who had been weighing a bid for governor, announced Wednesday his candidacy for lieutenant governor. Although Republican Gov. Corbett has struggled in the polls and is seen as vulnerable, Stack, 50, would have faced daunting competition for the Democratic nomination for governor. Stack now confronts a less formidable field for the right to challenge incumbent James Cawley, a Bucks County Republican. U.S. Rep. Robert Brady, the Philadelphia Democratic Party chairman, will serve as honorary cochair of Stack's campaign. State Sen. Shirley Kitchen, another city Democrat, will also serve as honorary cochair.

In a statement, Stack said he would advocate stricter gun-control laws, including universal background checks and a ban on high-capacity ammunition magazines. Seeking credibility with Pennsylvania voters who strongly favor gun-ownership rights, Stack noted that he was a gun owner and highlighted his service as a captain in the Pennsylvania National Guard. Stack, a ward leader, was elected to the Senate in 2000 and represents parts of Northeast Philadelphia, Kensington, Bridesburg, and Port Richmond. He is a grandson of Michael J. Stack, an Irish immigrant who served in the House of Representatives in the 1930s. His mother is Municipal Court Judge Felice Rowley Stack. Philadelphia Inquirer